Monday, April 27, 2015, 1:01 PM ET|Posted by Will Richmond
Capitalizing on video's tremendous monetization potential has become a top priority for all content providers, as evidenced by the biggest-ever NewFronts, which kick off today. But newly released survey results highlight how some content providers are already better positioned than others to actually profit from video advertising.
Ad tech provider Operative provided me with a cut of data from a new benchmarking survey it released last week, evaluating the correlations between video ad sales/operational effectiveness and profitability. The overall survey, done in partnership with Digital Content Next, provides insights into 194 content providers, with the cut I received focusing on the 70 content providers that generate at least 25% of their online billable revenues from video.
The data really underscores how impactful video has become, in multiple ways. For example, for the 70 video providers, average ad deal size was $53K, while for the full universe it was $38K. The average direct-sold CPM for video providers was $14.04 vs. $12.99 for the full universe. Average remnant CPM for video providers was $3.07 vs. $2.61 for the full universe.
Operative has identified a 5-stage "maturity model" to help categorize the extent to which content providers have operationalized their monetization processes, based on technology investments. The assessment is based on ratio of sales to operations, makeup of tech stack, RFP turnaround time and IO line processing.
Operative found that 42% of the video content providers were in level 3, in which overall yield/revenue is being improved by unifying digital technologies and processes onto a single platform. Just 10% of video content providers were at level 4, in which new value is created for customers by focusing more on value creation than on execution. Meanwhile 17% of video content providers were still at level 2, focused mainly on adding point solution technologies to plug holes in their operational processes.
The categorizations are critical because the survey found that ROIs improve dramatically based on better operational effectiveness. With video advertising still a relatively new industry and content providers scrambling to keep up, Operative found it's still relatively chaotic. Video content providers still use an average of 7.5 video ad tech vendors and have 3 operations employees for every seller.
At the NewFronts over the next 2 weeks we'll all hear a lot about creative new programs and compelling reasons advertisers should shift spending to online video. While these content investments are of course critical, operational investments are equally so for video content providers that want to grow profitably.
The full study results are available here.
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